{"id":194738,"date":"2023-08-10T00:00:00","date_gmt":"2023-08-10T04:00:00","guid":{"rendered":"https:\/\/ibkrcampus.com\/?p=194738"},"modified":"2023-08-10T11:55:50","modified_gmt":"2023-08-10T15:55:50","slug":"when-pigs-dont-fly","status":"publish","type":"post","link":"https:\/\/www.interactivebrokers.com\/campus\/traders-insight\/securities\/macro\/when-pigs-dont-fly\/","title":{"rendered":"When Pigs Don\u2019t Fly"},"content":{"rendered":"\n<h2 class=\"wp-block-heading\" id=\"h-what-s-going-on\">What&#8217;s going on?<\/h2>\n\n\n\n<p>Data out on Wednesday showed that China\u2019s consumer prices&nbsp;<em>fell<\/em>&nbsp;in&nbsp;<a href=\"https:\/\/www.cnbc.com\/2023\/08\/09\/china-reports-smaller-than-expected-drop-in-consumer-prices.html#:~:text=China%20reported%20a%200.3%25%20drop,National%20Bureau%20of%20Statistics%20Wednesday.\">July<\/a>&nbsp;\u2013 including the cost of the country\u2019s favorite meat.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-what-does-this-mean\">What does this mean?<\/h2>\n\n\n\n<p>With over six months of tepid Chinese economic data behind us, July\u2019s dip in prices wasn\u2019t entirely unexpected. And that 0.3% drop from the same time last year was mostly down to food and energy costs taking a hit \u2013 with pork prices plummeting a hefty 26%. And sure, if you strip out volatile items like that, then prices actually still climbed. But those staples are a porky part of Chinese households\u2019 expenses, and if they stay weak, falling prices could become a regular fixture in China.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-why-should-i-care\">Why should I care?<\/h2>\n\n\n\n<p><strong><em>For markets:&nbsp;<\/em><\/strong><em>Deflation dread<\/em><\/p>\n\n\n\n<p>The mere whisper of deflation sends shivers down economists\u2019 spines. Just ask China\u2019s neighbor, Japan: after the late \u201980s property bubble, the nation grappled with persistent price drops. And that meant consumers and businesses clutched their wallets tighter and tighter as time went on, awaiting future bargains \u2013 which ultimately caused a spending freeze that wreaked havoc on Japan\u2019s economy and stock market. Spotting parallels between China now and Japan then is easy \u2013 from the countries\u2019 aging demographics to their property market ups and downs \u2013 so China\u2019s leaders will be desperate to avoid a repeat of Japan\u2019s so-called \u201clost decades\u201d. But, hey: maybe this data will finally shock them into making some serious economy-boosting moves.<br><br><strong><em>The bigger picture:&nbsp;<\/em><\/strong><em>Watch closely.<\/em><\/p>\n\n\n\n<p>Leaders in the West will be paying close attention to China\u2019s inflationary trajectory. For one, it could be a sign of things to come: if the world\u2019s second-biggest economy is any indicator, then the West could wind up grappling with declining prices too. And for another, lower prices in China might percolate through the world in the form of cheaper exports. And if&nbsp;<em>both<\/em>&nbsp;those things happen, a swifter-than-expected interest rate pivot just might be in the cards in the West.<\/p>\n\n\n\n<p>&#8212;<\/p>\n\n\n\n<p>Originally Posted August 9, 2023 &#8211; <a href=\"https:\/\/go.finimize.com\/wp\/news\/when-pigs-dont-fly\/\">When Pigs Don\u2019t Fly<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Data out on Wednesday showed that China\u2019s consumer prices fell in July \u2013 including the cost of the country\u2019s favorite meat.<\/p>\n","protected":false},"author":186,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[4,18,8,9,26,3],"tags":[216,5994],"contributors-categories":[13597],"class_list":{"0":"post-194738","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-asia","7":"category-macro","8":"category-region","9":"category-securities","10":"category-text-articles","11":"category-traders-insight","12":"tag-china","13":"tag-consumer-prices","14":"contributors-categories-finimize"},"pp_statuses_selecting_workflow":false,"pp_workflow_action":"current","pp_status_selection":"publish","acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.9 (Yoast SEO v27.5) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>When Pigs Don\u2019t Fly | Traders&#039; Insight<\/title>\n<meta name=\"description\" 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